McCreevy claims EU tax competition is 'healthy'

European free trade commissioner Charlie McCreevy has called for European
finance ministers to have a free hand in their tax policies.

The European Commissioner tasked with ridding the European Union (EU) of
national regulations that hinder trade, declared his keen support for tax
competition between the 25 EU countries, saying that it promotes investment.

A former Fianna Fail finance minister, McCreevy told a KPMG meeting in Naas,
Ireland: ‘There are some who argue that lower taxation in one member state than
in another doesn’t give a level playing field. But they are dreaming if they
think that by levelling up the taxation levels across member states, they would
attract more inward investment’.

He continued: ‘The harsh reality is that… investment will flow to where it
attracts the best return – higher taxes across Europe would be followed by lower
investment across Europe’.

While claiming ‘tax competition between member states is healthy in that it
keeps pressure on governments to watch their domestic spending and keep their
tax regimes internationally competitive’, McCreevy pointed to his native
Ireland.

‘When we halved capital gains tax, the take doubled in the first year. Five
years on, more money is flowing into the exchequer in a single year at the 20%
tax rate than over the 23 years when it was at the 40% rate’.